Dr. Frank Bannor, Head of Research at the Danquah Institute (DI) and a lecturer at the Ghana Institute of Management and Public Administration (GIMPA), has warned against any blanket ban on small-scale mining in Ghana.
Dr. Bannor outlined the far-reaching economic and social impacts such a ban would have on the country, emphasizing that it could threaten key sectors of the Ghanaian economy.
“It does not make economic sense to ban small-scale mining. The livelihoods of millions of Ghanaians, the stability of our economy, and the strength of our currency depend on this sector’s survival.”
Dr. Frank Bannor, Head of Research at the Danquah Institute (DI)
Dr. Bannor drew attention to the crucial role that small-scale mining plays in Ghana’s employment landscape.
Referring to a 2016 United Nations Environment Programme (UNEP) report, he noted that over 1 million people are directly employed in small-scale mining, while 4.5 million more depend on the sector for their livelihoods.
This starkly contrasts with the large-scale mining sector, which, according to the 2020 Ghana Extractive Industries Transparency Initiative (GHEITI) report, directly employs just 8,760 people and supports an additional 25,603 contractors.
These figures underscore the sector’s significance, especially in rural areas where alternative employment opportunities are scarce.
“Small-scale mining supports millions of livelihoods across the country,” Dr. Bannor explained, adding that the effects of a blanket ban would ripple through rural communities, exacerbating poverty and inequality.
He stressed that these workers would find it challenging to transition into other industries, particularly in areas where the mining industry is the economic backbone.
Small-Scale Mining’s Contribution to Economic Growth
Dr. Bannor also highlighted the small-scale mining sector’s pivotal role in Ghana’s recent economic growth.
“The mining sector played a major role in Ghana’s impressive 6.9% economic growth in the second quarter of 2024,” he explained, pointing out that this was the fastest growth rate the country had seen in five years.
Data from the Ghana Statistical Service (GSS) show that the mining sector expanded by 9.3% during the same period, with gold production—driven by small-scale mining—experiencing an impressive 23.6% increase.
Dr. Bannor’s position challenged the growing calls for strict actions against illegal small-scale mining, or “galamsey,” which has been linked to environmental degradation and pollution.
While he acknowledged the need to address the illegal practices, he argued that targeting the entire small-scale mining industry indiscriminately would lead to dire economic consequences.
“Small-scale mining has consistently boosted gold output in Ghana,” Dr. Bannor noted. He pointed out that the industry had already recorded a growth rate of 6.8% in the first quarter of 2024, a testament to its stabilizing role in the economy.
According to him, the sector’s growth not only contributes to economic development but also creates jobs for skilled laborers, helping reduce unemployment.
With mining accounting for nearly 19% of employment in the industry sector, which in turn supports broader economic expansion, the consequences of a ban could be far-reaching.
“A shrinking mining sector will mean fewer jobs, reduced economic activity, and an increased strain on Ghana’s economic growth,” he warned.
Threat to Ghana’s Trade Surplus and Balance of Payments
Dr. Bannor emphasized that a blanket ban on small-scale mining would jeopardize Ghana’s trade surplus and balance of payments.
According to the Bank of Ghana, the country recorded a trade surplus of $1.81 billion in the first half of 2024, an increase from the $1.60 billion surplus recorded during the same period in 2023.
This improvement, he explained, was largely due to a significant rise in exports, particularly gold and crude oil, with gold exports contributing a significant portion of the surplus.
“The value of gold exports increased by 46.4% to $5.04 billion in the first half of 2024, with small-scale mining playing a key role in this growth,” he explained.
A ban, he argued, would drastically reduce gold output, weakening the country’s trade surplus and worsening its balance of payments. This would have a domino effect on other sectors of the economy, pushing the nation into a precarious economic position.
In addition to trade impacts, Dr. Bannor pointed out that small-scale mining is crucial to maintaining Ghana’s foreign reserves and stabilizing its currency.
In August 2024, Ghana’s Gross International Reserves had risen to $7.50 billion, providing 3.4 months of import cover. A large portion of these reserves came from the domestic gold purchase program, which relies heavily on small-scale miners.
The economist warned that banning small-scale mining would erode these reserves, leading to increased pressure on the cedi, which could lead to its further depreciation.
“A weakened currency would drive inflation, raise import costs, and put significant strain on the economy,” Dr. Bannor cautioned. This chain reaction would make life more expensive for Ghanaians, especially in a country where inflation has been a longstanding challenge.
Need for a Balanced Approach to Mining Regulation
While acknowledging the environmental risks posed by illegal small-scale mining, Dr. Bannor urged policymakers to take a more nuanced approach to regulation.
He argued that lumping legitimate small-scale miners together with illegal operators would do more harm than good. “We need to distinguish between illegal mining and legitimate small-scale mining operations that comply with environmental and regulatory standards,” he said.
Dr. Bannor proposed strengthening the regulatory framework rather than resorting to an outright ban. He called for improved monitoring, enforcement of environmental standards, and targeted measures to combat illegal activities.
A blanket ban, in his view, would punish law-abiding miners and cripple an industry that has been a pillar of Ghana’s economic growth.
In his assessment, the future of Ghana’s economy hinges on a balanced approach that safeguards both the environment and the livelihoods of millions who depend on small-scale mining for survival.
